For something that's literally designed to sit on a desk, yes... it's ridiculous to make it thinner in a dimension you never see vs one that you see all the time.
From the ifixit teardown of the previous M1 model [1], it seems that all the compute is going in the chin.
They can't put the compute in the back of the display itself, while maintaining the same thickness like an iPad (which has the same CPU), because the room behind the displays is dominated by the speaker system, allowing the iMac to have surprisingly good audio quality despite being so thin.
Now you could argue if it needs to be that thin but for the current configuration, there's nothing you can cram behind the screen.